Kwarteng in “dangerous state of denial” over mini-Budget, Reeves declares

Rachel Reeves has accused Kwasi Kwarteng of being in a “dangerous state of denial” over the mini-Budget and has again urged the Chancellor to reverse the economic plans set out in his fiscal statement.

Addressing the Commons this afternoon, the Shadow Chancellor said: “We’ve seen wild swings in the value of the pound, gilt yields up 100 basis points in a single day and the Bank of England stepping in because, in their words, of a “material risk” to UK financial stability.”

“This is a British crisis made in Downing Street. No other government is sabotaging their own country’s economic credibility as this government is,” the Labour frontbencher added.

The mini-Budget, delivered last month, set out a series of unfunded tax cuts, including cancelling a planned rise in corporation tax and reversing the National Insurance increase. Kwarteng faced criticism for not providing an Office for Budget Responsibility (OBR) analysis of the plans alongside his statement.

The pound crashed to its lowest level to date against the dollar and government borrowing costs soared following the Chancellor’s statement. The Bank of England announced today that it was taking emergency action for a third time in an attempt to calm the markets.

Reeves told MPs this afternoon: “The Chancellor is in a dangerous state of denial. But the costs of these mistakes are all too real for everyone else. Borrowing costs up, growth down, mortgage payments set to increase by £500 a month.

“Now they scrabble around looking for cuts, hitting the most vulnerable and hitting our public services. It does not need to be this way. So will the Chancellor now put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the Budget?”

The Chancellor revealed on Monday that he will publish the government’s “medium-term fiscal plan” on October 31st rather than the previously promised date of November 23rd.

He is expected to use the plan, alongside fresh forecasts for the economy and public finances from the OBR, to outline how the Conservatives will fund the tax cuts set out in the mini-Budget.

Keir Starmer said he was pleased that the Chancellor had brought forward the release of the fiscal plan but stressed that the mini-Budget has “got to be reversed”.

The Labour leader added: “We need to have a windfall tax on the oil and gas companies to pay or help to pay for the energy price freeze. And what that will do, and most important of all, is to stabilise the economy because this chaotic, irresponsible approach is all of the government’s own making.”

Labour announced on Monday that it will put pressure on the Chancellor to reverse the “disastrous” policies announced in the fiscal statement, using the parliamentary processes available to it as the opposition party to force further U-turns.

The government has already been forced to U-turn on its plans to scrap the 45% rate of income tax on earnings over £150,000, a proposal set out in the mini-Budget.

Reeves declared on Monday: “Families worried sick about bills haven’t even had so much as an apology from the Prime Minister or Chancellor, the architects of chaos unleashed on the British economy and family finances.”

“Labour has forced this Tory government to U-turn throughout the cost-of-living crisis, and we will do all we can in our power to do so again to get them to reverse this disastrous, kamikaze Budget,” she added.